Investors are eager for Arbitrum to launch a native token after it successfully introduced the Nitro upgrade last week. The perpetual futures exchange GMX has become a popular DeFi trading exchange.
Arbitrum said the Nitro upgrade improves the user experience for application developers, reduces network fees, and increases transaction speed. It can reduce the protocol’s fees by up to 27% as it compresses data sent to the Ethereum mainnet for validation. Application developers will also be able to compile code using standard languages than just using the previously custom-designed software.
However, Arbitrum faces strong competition in alternative Ethereum Layer 2 solution Optimism. It should be noted that Optimism has a native token, while Arbitrum relies on protocol usage for revenue. Investors interested in Arbitrum exposure look to the perpetual futures exchange GMX – a permissionless decentralized exchange. With GMX, users can leverage trades up to 30x. It has recorded significant transaction volume in recent months, GMX trials only some of the largest crypto protocols like Uniswap, Aave, and Synthetix in terms of daily fee revenue.
Moreover, the decentralized exchange runs on both Arbitrum and Avalanche. The platform uses two separate tokens GMX and GLP. The GMX token comes in handy for governance purposes as holders accrue 30% of network fees, while GLP accumulates 70% of network fees and is a liquidity provider token. Furthermore, the GLP token can only be minted on the GMX network wherein users have to deposit liquidity into pools. But doing so makes GLP’s performance dependent on the proportion of an asset in a liquidity pool.